NEW YORK (AP) — Fannie Mae said Monday it's finalizing a plan to help renters stay in their homes even if their landlord enters foreclosure.
The mortgage giant said it's working on a national policy to allow renters living in foreclosed properties — and who can make their rental payments — to sign new leases with Fannie while the property is up for sale or get cash to help move into a new home.
Last month, Fannie and sibling company Freddie Mac suspended foreclosure sales on occupied single-family homes and evictions from those properties through the holidays until Jan. 9, 2009. Fannie said these actions helped an estimated 7,000 to 10,000 families to remain in their homes.
The company said the new renter policy will go in effect before Jan. 9.
Last week, New Haven Legal Assistance Association Inc. in Connecticut, which represents several tenants facing eviction on properties held by Fannie Mae, raised the concerns about renter evictions and discussed the situation with Fannie on Friday.
"Fannie Mae had the tendency to empty these properties with no attempt before or after the foreclosure to contact these tenants," said Amy Marx, an attorney at the legal aid group. "A lot of these renters are low-income and an eviction wreaks havoc on their lives due to moving costs and the lack of affordable housing."
Despite the suspension on foreclosure sales and evictions, some Fannie evictions were still going forward, Marx said. Fannie said Monday it contacted its lawyer and broker network to halt those evictions.
Fannie and sibling company Freddie Mac own or guarantee about half of the $11.5 trillion in U.S. outstanding home loan debt. The government seized control of the pair in September.
Company spokesman Brad German said Monday that Freddie Mac also aims to have a similar plan in place by early January.
"Clearly, renters are caught in the crossfire," German said. "The goal is to provide them some stability and not evict them as a result of another's foreclosure."
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